Participation in cash assistance programs, particularly AFDC/TANF, has fallen dramatically over the last five years. At the same time, childbearing has declined, now equaling the record low level reported in 1976. Although caseload decline is usually analyzed in terms of changes in the economy and welfare policy given that a child is required for eligibility in AFDC/TANF, we believe it is of independent interest to ask how much of the decline observed in the caseload can be explained by changes in birth rates. Taking childbearing as a proximate determinant of welfare receipt, the applicant proposes to examine fertility's effect on the size of the AFDC/TANF caseload. While the simple relationship between childbearing and welfare participation is evident, modeling and estimating the actual impact of birth rates on participation is quite complex. Birthrates can have both a short- and long- term impact on changes in the caseload, and modeling changes in the caseload requires capturing the flows of cases entering and exiting the AFDC/TANF population. The proposed research will examine the dynamic relationship between changes in childbearing and changes in the AFDC/TANF caseload. Specifically, the applicant will 1) Estimate the impact of the timing of first birth on the likelihood of entering AFDC/TANF use and the variation in the impact by age of mother and across groups of women; and 2) Estimate the impact of recent changes in the AFDC/TANF caseload caused by changes in the birth rate (via new AFDC/TANF cases, returning cases, and duration of receipt). The applicant will use a dynamic model of the caseload that estimates the flows of individuals in and out of participation over time and that parcels out the extent to which these flows are determined by birth rates. Data will come from both the [Panel Study of Income Dynamics] PSID, which is well suited to precisely estimating how participation is affected by the timing of first births, and data from the National Vital Statistics System and the Medical Eligibility Data System of the California Department of Social Services, which allows the estimation of the impact of birth rate decline on recent welfare decline.